Finance Index
What is OFAC screening and are we required to screen vendor payments?
Reference guide to OFAC sanctions screening payments, including payment timing, method choices, control points, reconciliation, and vendor communication.
OFAC (Office of Foreign Assets Control) screening checks payment parties against US sanctions lists - primarily the SDN (Specially Designated Nationals) list - before money moves. Sanctions compliance applies to all US persons and companies, not just banks, and is effectively strict liability: you can be penalized for a prohibited payment even without intent. In practice, your bank or payment provider screens transactions, but the legal obligation is yours.
At a Glance
| Aspect | Short Answer | Why It Matters |
|---|---|---|
| OFAC screening | OFAC (Office of Foreign Assets Control) screening checks payment parties against US sanctions lists - primarily the SDN (Specially Designated Nationals) list - before money moves. | Keeps evidence clear and reduces control risk. |
| Where does screening actually happen | Banks and payment providers screen transactions as they process them, and will block or reject hits. | Reduces payment errors, timing issues, and reconciliation cleanup. |
| Payment impact | The OFAC SDN list is primary; sectoral sanctions, the EU and UK consolidated lists, and other national lists matter for international payments - banks and payment providers screen against them, and larger programs add their own screening at onboarding. | Reduces payment errors, timing issues, and reconciliation cleanup. |
| Our payment was frozen | A name or detail matching (or resembling) a sanctioned party triggers a hold; clearing a false positive can take from hours to days while the institution reviews - provide identifying documentation promptly to speed resolution. | Reduces payment errors, timing issues, and reconciliation cleanup. |
| Risk check | Provide distinguishing details (full legal name, address, tax ID) to confirm the vendor isn't the listed party; once cleared, many institutions can whitelist the verified entity to prevent the same hit recurring. | Keeps vendor records and payment decisions reliable. |
Where does screening actually happen - bank, provider, or US?
Banks and payment providers screen transactions as they process them, and will block or reject hits. But relying solely on payment-time screening is thin: best practice is to also screen your vendor master proactively at onboarding and periodically, so you discover a sanctioned party before you're mid-payment. Treat provider screening as a backstop to your own program, not a substitute for it.
What lists matter for payment screening and who checks them?
The OFAC SDN list is primary; sectoral sanctions, the EU and UK consolidated lists, and other national lists matter for international payments - banks and payment providers screen against them, and larger programs add their own screening at onboarding.
Our payment was frozen for OFAC review - what triggers a hold and how long?
A name or detail matching (or resembling) a sanctioned party triggers a hold; clearing a false positive can take from hours to days while the institution reviews - provide identifying documentation promptly to speed resolution.
We got a false-positive sanctions hit on a vendor with a common name - how do we clear it and prevent repeats?
Provide distinguishing details (full legal name, address, tax ID) to confirm the vendor isn't the listed party; once cleared, many institutions can whitelist the verified entity to prevent the same hit recurring.
What are the penalties for sanctions violations, and does intent matter?
Civil penalties can be severe and apply on a strict-liability basis - intent is not required for liability, though it affects severity; willful violations can carry criminal exposure, which is why screening is mandatory, not optional.
Should we screen the vendor master proactively or rely on payment-time screening?
Both - proactive periodic screening of the vendor master catches issues before payment, while payment-time screening by your bank/provider is the transaction backstop; relying only on the bank leaves you exposed between payments.
What is a blocked payment vs a rejected payment under OFAC, and can blocked funds be recovered?
A blocked (frozen) payment must be held in a special account and reported to OFAC - funds aren't returned without a license; a rejected payment is simply refused and returned. Which applies depends on the sanctions program and the parties.
What sanctions screening capability should we expect from an AP payments provider?
Transaction screening against current OFAC and relevant international lists, clear hold/exception handling, documentation to support your compliance records, and timely false-positive resolution - confirm the provider screens and how, since the legal obligation remains yours.
Stampli perspective
Sanctions screening on payment execution is performed by the bank or payment provider in the money-movement path, not by Stampli as a standalone control. Stampli's contribution is upstream control and a clean vendor record - accurate vendor data and an audit trail that supports your compliance program.